The International Monetary Fund (IMF) yesterday said Iraq's economy would expand significantly as long as the security situation allows for higher oil production and investment.
Mohsin Khan, the IMF's director for the Middle East, said Iraqi oil production was forecast to climb by 200,000 barrels per day to 2.2 million barrels a day in 2008.
"We are expecting much higher growth, and it is really coming from the fact that we expect oil production to be higher," Mr Khan said.
"We also think that the government will . . . if the security situation continues to improve . . . be able to fulfil its major investment plan in the oil and the non-oil sectors," he added.
He said the higher oil output would push gross GDP significantly up to over 7 percent, possibly higher, in 2008 and 2009, from just 1.3 per cent in 2007 when sectarian violence drove the country to the brink of civil war.
Mr Khan said 2007 growth for Iraq may well turn out to be stronger because the IMF's forecast of 1.3 percent was based on indicators for the first six months of the year. Since then, new data for the second half of 2007 showed economic activity may have been stronger than believed, he added.
He said rising oil export prices had more than offset production shortfalls and boosted international currency reserves by close to $7 billion. By the end of 2007, reserves were $27 billion, some $6 billion higher than projected, he said.
Despite a stronger fiscal position, Mr Khan said Iraq would still need aid, particularly when it came to securing the country.